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Even though Bulgarians have the lowest incomes among all European Union countries, citizens in debt have become more responsible in repaying their loans – especially to banks.

This is according to the country’s association of debt collections, which also told a news conference on March 12 that the worst defaulters were young people without steady jobs who took “quick loans” but then failed to repay them.

Bulgarians tended to prioritise repaying mortgage loans, aware of the serious consequences of failure to do so, the association said.

Paying water and heating bills tended to be low on the list of Bulgarians’ priorities. Keeping up with payments of fees for cable television and internet had improved, but there was a tendency to lag in paying money owing to mobile phone operators.

Debt collectors said that in Bulgaria, the average debtor was a man aged between 41 and 50, married, with his own business and living in north-western Bulgaria.

There was a growing trend of young people who used “fast loans” to buy mobile phones and other electronic devices.

Chronic debtors were those overdue in payments by more than nine months, and who somehow managed to accumulate new debts, especially through fast loans.

The “champions” among creditors were banks and telecommunications companies, which made up about 80 per cent of all debts owed in the country.

The president of the debt collectors’ association, Raina Mitkova-Todorova, said that debt collection rates had improved, and were up by about three per cent in the first two months of 2014 compared to the first two months of 2013.

This fact was notable also because the first two months of the year are traditionally difficult months financially for Bulgarian households.

“Bulgarians are gradually becoming wealthier and more responsible about repayments,” she told the news conference.

Mitkova-Todorova said that companies continued to have difficulty in collecting debts.

She said that companies took too long before handing debts over for collection, often about two to three years. The outcome was that the success rate in debt collection was not good.

Companies were worried about the reaction when they handed their customers and partners over to debt collectors.

Debts older than nine months tended to have a collection rate of zero, she said.

The industries most troubled by unpaid debts were construction, the metals industry and transportation.

Overall, the rate of debt collection in Bulgaria continued to lag behind in spite of signs of economic recovery.

In 2013, the rate of debt collection in Bulgaria was 18 per cent, while in the other countries of Central and Eastern Europe, it was about 24 to 25 per cent.

Mitkova-Todorova said that a major challenge for debt collectors was to find debtors, because of a lack of access to public databases.

She said that the debtors tended to “appear” when creditors were already taking legal action.

Lenders were increasingly offering various instruments to relieve debtors so that they could ultimately meet their obligations, including debt restructuring and grace periods.

“Unfortunately, when a loan already has been restructured twice and the client continues to experience difficulties, it is difficult to propose a further measure of relief,” she said.

According to Mitkova-Todorova, in 2013 a new kind of bad debtor appeared, an increasing number of young people aged 23 to 24 with no regular income who took quick loans, which in most cases remained outstanding.

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